Answered

Explore a diverse range of topics and get expert answers on IDNLearn.com. Explore a wide array of topics and find reliable answers from our experienced community members.

Dawson Toys, Ltd., produces a toy called the Maze. The company has recently created a standard cost system to help control costs and has established the following standards for the Maze toy:

Direct materials: 6 microns per toy at $0.33 per micron
Direct labor: 1.2 hours per toy at $7.10 per hour

During July, the company produced 5,100 Maze toys. The toy's production data for the month are as follows:

Direct materials: 72,000 microns were purchased at a cost of $0.30 per micron. 33,750 of these microns were still in inventory at the end of the month.
Direct labor: 6,420 direct labor-hours were worked at a cost of $50,076.

Required:
Compute the following variance for july:

a The materials price and quantity variances
b. The labor rate and efficiency variances

Sagot :

Facundobuzzettiidn

Answer:

ee

Explanation:

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (0.33 - 0.3)*72,000

Direct material price variance= $2,160 favorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Direct material quantity variance= (6*5,100 - 38,250)*0.33

Direct material quantity variance= $2,524.5 unfavorable

To calculate the direct labor time and rate variance, we need to use the following formulas:

Direct labor time (efficiency) variance= (Standard Quantity - Actual Quantity)*standard rate

Direct labor time (efficiency) variance= (1.2*5,100 - 6,420)*7.1

Direct labor time (efficiency) variance= $2,130 unfavorable

Direct labor rate variance= (Standard Rate - Actual Rate)*Actual Quantity

Direct labor rate variance= (7.1 - 7.8)*6,420

Direct labor rate variance= $4,494 unfavorable

We appreciate your contributions to this forum. Don't forget to check back for the latest answers. Keep asking, answering, and sharing useful information. Thanks for visiting IDNLearn.com. We’re dedicated to providing clear answers, so visit us again for more helpful information.